The founder of Greenwood’s North New Summit School and her son have been arrested in connection with what the state auditor is calling the largest public embezzlement in Mississippi history.
Dr. Nancy New and her son, Zach New, were among six individuals arrested Wednesday by special agents from the State Auditor’s Office for allegedly conspiring to illegally obtain millions of dollars in federal welfare funding administered by the state Department of Human Services.
Also arrested following an eight-month investigation were John Davis, the former director of DHS; former DHS employee Latimer Smith; Ann McGrew, an accountant who works for the News; and Brett DiBiase, a retired professional wrestler.
All six were released on their own recognizance.
North New Summit and the handful of sister schools established by Nancy New are not implicated in the charges leveled by State Auditor Shad White. The Greenwood native’s other main educational venture, the nonprofit Mississippi Community Education Center, is.
Nancy New is the owner and executive director of MCEC, which operates Families First Resource Centers across the state, including one in Greenwood, that provide parenting and workforce training and other educational services. A significant portion of MCEC’s funding has come through the Department of Human Services. Zach New is MCEC’s assistant executive director. McGrew is MCEC’s accountant.
According to a press release issued by the auditor’s office, the News are accused of transferring millions of dollars in Temporary Assistance for Needy Families (TANF) funds to their private businesses. “They then converted funds to their personal use and concealed the conversion through various fund transfers, fraudulent documents, at least one forged signature, and deceptive accounting practices,” the press release said.
Attempts to contact the News by telephone Wednesday night were not successful.
The two are also accused of conspiring with Davis, the former DHS head, to use TANF money to pay for DiBiase’s opioid treatment at a luxury rehabilitation facility in Malibu, California. According to the auditor’s office, the News submitted documentation claiming the expenditures were to pay DiBiase for conducting training classes that never took place.
Separately, Davis and his assistant, Latimer Smith, are accused of fraudulently paying DiBiase with TANF funds for teaching classes about drug abuse when DiBiase at the time was actually being treated for his own drug use at the Rise in Malibu facility.
The News and Davis are also accused of diverting TANF funds to pay for personal investments in medical device companies in Florida.
“I don’t care how politically connected a person may be. You do not have the right to treat taxpayer money as your own or to lie to the taxpayers about what you’re doing with that money,” White said in a prepared statement. “Others doing this kind of thing are on notice: this will not be tolerated now.”
The six were arrested following their indictment by a Hinds County grand jury.
The press release said the total amount of money lost to the various schemes has not been determined but that it exceeds any embezzlement records in the auditor’s office going back 20 years.
“The funds that were illegally obtained in this case were intended to help the poorest among us,” White said. “The funds were instead taken by a group of influential people for their own benefit, and the scheme is massive. It ends today.”
Following the arrests, the Department of Human Services issued a statement saying the auditor’s investigation was launched after the agency had reported its concerns to former Gov. Phil Bryant’s office last June.
Davis worked for the Department of Human Services for 28 years, and Bryant chose him to lead the agency in 2016. Davis retired in July, about the same time that the auditor’s office began its investigation.
“MDHS would like to thank the Office of the State Auditor investigators for their diligent work in seeing this investigation through. We look forward to this moving through the justice system to a final disposition,” the statement said.
DHS spokesman Danny Blanton told The Associated Press that an internal auditor uncovered the fraud. He said the department’s current leaders have since strengthened measures to prevent fraud.
In addition to operating the private 147-student North New Summit School, Nancy New has been trying unsuccessfully for the past two years to convince the state to authorize her to open a publicly funded charter school in Greenwood.
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